Two thirds of self employed think it’s significantly more difficult to secure a mortgage

And, three out of five believe some lenders don’t want to deal with them because of their self employment.

The research, carried out by BVA BDRC exclusively for us, interviewed 100 self employed and 200 employed individuals on their housing aspirations during August.

A majority of the self employed interviewed (59%) believe it takes longer to apply for, and secure, a mortgage because of their self employed status, and one in two said there is a restricted choice of lenders available to them (51%). This has resulted in only 39% of self employed people thinking it is now a good time to be a homeowner, compared to almost half (47%) of employed respondents.

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However, the research also shows there may be a disconnect between perception and reality when it comes to mortgage accessibility, with just 14% of those self employed individuals saying they had actually been declined a mortgage as a result of being self-employed.

Positively, the self employed were more likely than their employed counterparts to have used the services of a mortgage adviser or IFA when arranging their current mortgage: 44% compared to 31%. This shows the opportunity for advisers with the self employed especially given the perception that they encounter greater difficulties in securing a mortgage.

In terms of credit scores, however, the self employed are, on average, more likely to have a low credit score and were more likely to have seen ‘a big reduction in income for any other reason’ over the last 12 months. Yet almost half – 42% - of the self employed have never carried out a credit check, again pointing to an opportunity for advisers to outline the reality of their financial situation to self employed borrowers.

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We offer a range of mortgages for the self employed with criteria including an acceptance of one year or the latest year’s accounts, manual underwriting of the self employed individual’s share of the net profit plus the director’s salary and accepts two years’ average retained profit and the latest year’s income. We can accept income from UK land and property, up to 100% of a wide range of incomes including State and private pensions up to age 75, and up to four family members’ incomes up to 80% LTV.